Agrarian Crisis And Distress In Rural India

Kartik Rai

RURAL India is in acute distress. Over large tracts of the country there is not enough work, not enough income, not enough food to eat and not enough water to drink for the rural population. Of course, the bulk of the population in rural India has always experienced pitiable living conditions. But their conditions are much worse at this moment than perhaps at any other time since the mid-sixties.

Those commentators who at all bother to notice this state of affairs, and they are few and far between, attribute this distress to the prevailing drought, which gives the impression, first, that it is a transitory phenomenon, and secondly, that it is a curse of nature. This however is erroneous. The drought comes on top of a situation of increasing distress for the rural population. Its impact therefore becomes even more difficult to bear, since the increasing distress of the past several years has left the people without any cushion.

DECLINING FOOD AVAILABILITY

The magnitude of distress can be gauged from the two Tables given below (both taken from Utsa Patnaik, "Foodstocks and Hunger" mimeo.). The 1990s have not only seen a steady decline in the level of per capita food availability in the country as a whole (taking both rural and urban India together), but the absolute amount of per capita food availability in the year 2002-3 was lower than during the years of the Second World War, years that saw the terrible Bengal famine. Since urban India, on average, has not seen any drastic decline in food availability, the actual situation in rural India, it follows, must be even worse than these figures suggest. And this situation, it must be emphasized, is prior to the onset of the current drought. The drought has only accentuated a state of distress in rural India that has been growing ever since the 1990s, i.e. ever since country embarked on the programme of neo-liberal economic reforms.

Table 1

Summary of Foodgrains Output And Availability in India in The Nineties

( Three Year Annual Average)

Source: Economic Survey for years 1999-00, 2000-01, 2002-03  for total Net Output of Cereals and Pulses, and total net availability of Cereals and Pulses, up to 1999-2000. Population figures for inter-censal years derived by applying the growth rate of 1.89 % p.a. yielded by the Census population totals for 1991 and 2001.

Availability figure of 141.5 kg  for 2002-03 is provisional: net output figure is firm, from this 9.6 m t of grain exports as mentioned in ES 2002-03, has been deducted - amounting to exactly 9 kg  per head, and net change in stocks is assumed to be nil . Since actually over 11 m t  has been exported up to March 31, and this may not be compensated by drawing down of stocks, actual availability may be lower.

Table 2

Annual Net Foodgrains Output and Availability, British India 1891-1946

Source:  Net Output is obtained from gross output data in Blyn (1966) following the present-day practice, by deducting one-eighth from Gross output on account of seed, feed and wastage. Last two columns are comparable with present day concepts of per head output and availability detailed in Table 1.

FLAWED ARGUMENTS

Apologists for the neo-liberal policies put forward a curious argument to explain the decline in per capita food availability. This decline, they contend, is because of a change in the dietary habits of the people: they have diversified their consumption pattern away from foodgrains towards all kinds of less elemental and more sophisticated commodities. Far from its being a symptom of growing distress, the decline in food availability is actually indicative of an improvement in the conditions of the people, including the rural poor. Some have even gone to the extent of suggesting that with the changes occurring in Indian agriculture in terms of the cropping pattern and use of machinery, hard manual labour, such as what the peasants and workers used to put in earlier, has ceased to be necessary. Correspondingly, the need for consuming a huge amount of foodgrains no longer arises. The rural population now is no longer constrained to remain stuck with the old consumption pattern; it can afford to sample more up-market goods, including food items, which it is doing with a vengeance.

The dishonesty of this argument is quite appalling. All over the world, and all through history, as people have become better off they have consumed more foodgrains per capita, not less. True, this increase in foodgrain consumption per capita with increasing per capita incomes does not take the form of larger direct consumption of foodgrains; it takes the form of larger indirect consumption, so that taking direct and indirect consumption together the per capita consumption of foodgrains increases with rising incomes. In other words people do not consume more corn per se, or more cereals per se. They consume more poultry products, more meat, and more processed foods, into the production of which more foodgrains enter. They consume, say, more animal products, but the animals in turn consume more foodgrains, so that the people consume, directly and indirectly, more foodgrains per capita. Thus in the former Soviet Union the annual per capita consumption of foodgrains, both directly and indirectly, was as much as 1 tonne. This does not mean that a Soviet citizen actually consumed 1 tonne of foodgrains per year; he or she consumed only a fraction of it directly and the rest via larger animal products and processed foods. Likewise in the US today the annual per capita consumption, both direct and indirect, of foodgrains comes to about 850 kilogrammes, which is six times the Indian figure of availability (the availability figure for India today is likely to be larger than the consumption figure since the former includes consumption plus additions to private stocks and such additions must be occurring at a time when public foodgrain stocks are burgeoning).

Within India too when we look at cross-section data across states, it is clear that states with higher per capita incomes have higher per capita consumption of foodgrains, i.e. foodgrain consumption rises with income. What is true, and is invariably dragged into the argument by neo-liberal apologists, is that, according to NSS data, per capita consumption of foodgrains is declining over time for all income groups, which is supposed to support the "changing tastes" hypothesis. But, in the case of the higher income groups, this finding loses its relevance because indirect consumption of foodgrains via processed foods etc. is systematically underestimated by the NSS. When we bear in mind the additional fact that the per capita calorie intake has gone down drastically for the entire rural population (see Table 3), and hence is likely to have gone down even more drastically for the rural poor, the fact of growing rural distress stands out in bold relief

Table 3

Average Total Calorie Intake  Per Diem

in Rural and Urban India, 1983 to 1998

Source: Utsa Patnaik, “Foodstocks and Hunger” mimeo. Based on NSS Surveys on Consumer Expenditure

INCOME DEFLATION IN RURAL INDIA

This growing distress has occurred precisely during the very years when the country has accumulated enormous foodstocks; indeed these two phenomena are the two sides of the same coin. The fact that accumulation of such enormous foodstocks has occurred despite a stagnation (or even a marginal decline) in per capita foodgrain output in the country during the nineties (see Table 1), suggests that the cause of this accumulation is the absence of adequate purchasing power in the hands of the rural population. It is this squeeze on purchasing power that is also the cause of the growing distress. In other words, the period of neo-liberal reforms has seen a significant curtailment of purchasing power in the hands of the working people, especially in rural India, which has caused growing distress on the one hand and an accumulation of unwanted foodstocks in the hands of the government on the other. The fundamental cause of the growing rural distress is income deflation in rural India.

The most obvious and basic cause of this income deflation is the cut in government expenditure in rural areas. Table 4 gives figures of rural development expenditure as percentage of GDP. The decline, especially after the mid-nineties is quite drastic. 

Table 4

Rural Development Expenditure As Percentage of Gdp

Note: Rural Development Expenditure includes expenditure on agriculture, rural development, special areas programme, irrigation and flood control, village industry, energy and transport.

Public expenditure is an important source of employment generation in rural India. A number of well-meaning commentators, seeing that the bulk of public expenditure, including even that expenditure which is meant to benefit the rural poor, gets into the hands of the rural rich, often come to the conclusion that the curtailment of such expenditure would have little adverse effect on the rural poor. This is erroneous. No matter to whom the expenditure accrues in the first instance (and of course it is an exaggeration to say that all of it gets into the hands of the rural rich), its multiplier effects do generate jobs for the rural poor. The cessation of such expenditure therefore hurts them. And this is exactly what has happened. Perhaps the most important source of injection of purchasing power into rural areas has dried up under the impact of the neo-liberal economic "reforms" which have brought in their train acute fiscal crisis of the State. In the miasma of confusion that constitutes the so-called "State versus Market" debate (as if the pro-market reforms entail a "withdrawal of the State" as opposed to a harnessing of the State for their own benefit by international finance capital and its local allies), what is particularly striking is the fact that the role of public expenditure in generating employment, especially in rural areas, scarcely ever figures. But that is symptomatic of an even deeper malaise, namely that rural India, especially the rural poor, have completely disappeared from the official economic discourse these days, except in the tendentious statistics about decline in poverty!